St. John’s OZ FM aired the song last year, sparking a complaint that has essentially resulted in a ban [from the Canadian Broadcast Standards Council] on the word from radio airplay in any song – a victory, according to a major gay-rights group, against a slur often hurled by violent gay bashers.

What seems to have happened here is that the Straits have been used as a stalking horse to get "faggot" declared off-limits for all broadcasters, so presumably the complainants were aware the f-word was being dropped in character, but knew by kicking up this storm they could block much more unpleasant songs from appearing on the radio.

Mark Knopfler has spoken before about objections to word:

The lyrics portray the character who uses the epithets as ridiculous. But in a 1985 Rolling Stone interview, Mr. Knopfler said complaints made him wonder whether having the word spoken by a fictional character was too subtle for song. “It suggests that maybe you can't let it have so many meanings – you have to be direct,” he said.

When someone is worrying that a Dire Straits song might be "too subtle", you're in strange territory indeed.

Watching out for hatred is fair enough, but this judgement feels a bit out of line. Surely the context is important?